) has posted fourth quarter 2011 adjusted earnings per share (
) of 68 cents, inching past the Zacks Consensus Estimate by a
penny. Results were up 9.7% from 62 cents reported in the year-ago
quarter. The adjusted EPS excludes acquisition-related amortization
expense. Management attributed the improvement to diverse product
offerings which expanded Equifax' scope within the market.
Revenue grew 5.7% year over year to $509.7 million. The upside
could be attributed to top-line growth across the board, partially
offset by lackluster performance by the International segment.
Segment wise, total U.S. Consumer Information Solutions (USCIS)
revenue was $215.6 million, up 13.0% from the year-ago quarter.
Among sub-segments, strong growth was noticed in Online Consumer
Information Solutions (17.0%), followed by Mortgage Solutions
Services (13.0%). The company witnessed a relatively slower growth
rate in its Consumer Financial Marketing Services segment
Total International (including Europe, Canada and Latin America)
revenue slid 8.0% year over year to $116.3 million. Of this, Latin
America decreased 26.0%, Europe grew 15.0%, and the Canada Consumer
segment climbed 3.0% in U.S. dollar terms.
Revenue from the TALX segment increased 3.0% year over year to
$105.8 million. The upside resulted from an 11.0% year-over-year
increase in T Verification Services revenue and Employer Services
North American Personal Solutions contributed $45.6 million,
reflecting a 21.0% year-over-year improvement. North American
Commercial Solutions brought in $26.4 million, up 6.0% from the
Gross margin in the fourth quarter was 61.9%, up from 59.9% in
the year-ago quarter. Operating margin was 24.7% as against 22.8% a
year ago. The margin performance was better in USCIS, International
and North America Commercial Solutions, partially offset by weak
performances by North America Personal Solutions and TALX.
The company reported higher operating expenses with selling,
general and administrative expenditure increasing 8.5% year over
year, partially offset by a 1.9% decline in depreciation and
On a GAAP basis, net income from continuing operations was $72.9
million or 60 cents per share versus $62.2 million or 50 cents per
share in the comparable quarter last year. Excluding the impact of
acquisition-related amortization expense (net of tax) and a tax
benefit, adjusted net income was $83.0 million or 68 cents per
share, compared with $76.9 million or 62 cents per share in the
Balance Sheet, Cash Flow & Share Repurchase
Equifax exited the quarter with $127.7 million in cash and cash
equivalents, up from $102.0 million in the previous quarter.
Accounts receivables were $284.4 million. Total long-term debt was
$1.01 billion, down from $1.04 billion in the prior quarter. Cash
provided by operating activities was $149.7 million, compared with
$112.0 million in the prior quarter.
The company bought back 1.9 million of it common shares for
$67.1 million during the quarter. At December 31, 2011, the
remaining authorization for future share repurchases was $112.1
For the first quarter of 2012, Equifax expects revenue to be up
9.0% to 12.0% from the year-ago quarter, based on contributions
from domestic and international businesses and the ongoing foreign
exchange rates. Excluding the impact of acquisition-related
amortization expense, Equifax expects adjusted earnings per share
to range between 64 cents and 67 cents. The Zacks Consensus
Estimate for the first quarter is 65 cents, which is at the higher
end of the company's guidance.
We are not very excited about the company's fourth quarter
performance, which marginally surpassed the Zacks Consensus
Estimate on the bottom line. But we are optimistic about revenue
growth prospects and improving margins through fiscal 2012.
Management's efforts regarding strategic initiatives around
product innovation, broadening data assets through acquisitions and
continuous share gains in North America were encouraging.
However, given the company's strong correlation to consumer and
financial markets, as well as its U.S. exposure, we see a gradual
improvement in results. But stiff competition from
Automatic Data Processing Inc.
) is a concern.
Currently, Equifax has a Zacks #3 Rank implying a short-term
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